6 Tips for Restaurant Owners

Restaurants are one of the most common types of small businesses, but also one of the most difficult to make successful. The competition for most restaurants, even in small towns, is pretty intense, and margins are thin. Here’s advice from 6 top restaurant owners on how to survive and thrive.

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6 Tips for Restaurant Owners

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Make Sure You Buy Wisely

Last year, Danny Meyer's company, Union Square Hospitality, saved $200,000 through group buying. But he didn't force the chefs at his catering company and at his 9 restaurants to buy anything through the corporation. He made corporate procurement voluntary. As chefs discovered savings, they began to add more supplies to the group-buying bucket. “Saving 2 percent here and 3 percent there adds up to a lot, especially in a business with razor-thin margins," Meyer says. "And it has preserved our culture of bottom-up leadership.”

Stay Close to Your Staff

Once a quarter, Roger Berkowitz of Legal Sea Foods, a Boston-based chain of more than 30 restaurants, brings together a council of hourly wait staff and bartenders to brainstorm new business ideas: "I pose questions like, How can we make the restaurants more kid-friendly? Groups of workers hash it out for 20 minutes among themselves. Then they give their presentations, and we discuss it together. We close with a forum in which anyone can talk about anything. These guys have great ideas, and I act on most of them."

Focus on Your Guests’ Moods

When guests arrive for a reservation at the Inn at Little Washington in Washington, Virginia, the captain assigns them a number that assesses their mood (from 1 to 10, with 7 or below indicating unhappiness). The mood rating is typed into a computer, written on the dinner order, and placed on a spool in the kitchen where the entire staff can see it. Staffers spare nothing -- be it complimentary champagne or a tour of the kitchen--to get diners up to a 9. "If guests ran into terrible traffic on the way over here, or are in the midst of a marital dispute, we need to consider it our problem," says chef-owner Patrick O'Connell.

Make Sure You Have Room to Expand

Everyone knows that location, location, location is crucial, but you must also pay attention to local building codes and zoning laws. "When selecting your property, even if you are purchasing, make sure you know in detail what rights you have to alter the space, including expansion possibilities," says Gerard Craft, the chef-owner of Niche in St. Louis. "And select the best contractor to build the space even if it means spending a little more. Often, going with the cheaper bid costs more in the long run."

Push Yourself to Understand the P&L

Barbara Lynch opened No. 9 Park in Boston in 1998, and it was named one of the 25 best new restaurants in America by Bon Appétit. Still, Lynch struggled. “The first few years at No. 9, I didn't know the business part,” she says. “It was tough enough trying to run a kitchen and deal with staff and not get overwhelmed. I really didn't know what a P&L was. One of my sous-chefs had a business education, so she and I worked together to tighten things up, and I learned much more about business.” By 2002, she was savvy enough to open two new restaurants across the street from each other, in order to save on construction costs.

Define Your Role as Owner

"It’s a matter, as a founder, of trying to figure out what you're best suited to do,” says Tom Colicchio, the chef-owner of the Craft family of restaurants and the head judge of the Bravo TV series Top Chef. “The second you think nobody else can do what you can do, you're not going to grow. You have to rely on the fact that you can train someone, and that he or she will put his or her heart and soul into the business as much as you would. If you don't have that trust, it won't work."